The tied agent network remains the key sales channel for most of the respondents. Although fluctuation was somewhat lower in 2012 compared to the previous year (29% vs. 33%), the decrease was mostly due to lack of alternative options on the labour market for agents.
High fluctuation is also related to the structure of the agent network. As indirectly reflected in Figure 19., 58% of the participants stated that their network consisted solely of contractors, which generally does not invoke the long-term relationships. The conctractor status is widely used in most countries, because it is preferred for tax optimization reasons.
Figure 19. Channel management in the organization
ANNUAL FLUCTUATION RATE [%] RELATIVE EFFECTIVENESS OF AGENT AGENT NETWORK TYPE [%] INCENTIVES Non-monetary incentives Outsources Contractors Employees Mixed (Employees +contractors)
Source: Efma, Roland Berger
Competition Extra bonus 2011 2012 33% 29% -12% 6 58 24 12
Effective Not effective
Majority of agent networks operate with contractors – Fluctuation declined compared to last year
CHANNEL OPERATIONS AND PERFORMANCE
Insurers will have to focus even more on agents’ enhanced onboarding programs to maintain the promising declining trend of fluctuation. Besides training programs, best practices of agent incentives include competition, extra bonuses and non-monetary incentives. There is consent that competition might be the optimal tool for high- performing agents and extra bonuses are a relevant motivational tool for average performers, companies have mixed views on the efficiency of non-monetary incentives. For all insurers the right segmentation of agents is crucial. The industry consensus says that the training and development of a highly productive, high quality agent from the basics takes usually 2-3 years from the time of the recruitment. But this three years is (usually) still not enough to create a portfolio of 200-300 clients to become a ‘farmer’. In our typology, we identify at least three types of agents, that have different behavior and priorities, so require different trainings, coaching, remuneration and motivation. 1. ‘Starters‘
> After basic training significant coaching effort needed from unit managers > The first priority is to discover and understand the client needs
> Refreshment trainings can always boost their performance
> Campaigns do not really motivate them but ATL communication makes their life significantly easier
> Motivation scheme must focus on natural selection, that shall allow talented agents to see a positive career path.
2. ‘Hunters’
> Individual workers having the basic product and sales know-how and experience > The challenge of this agent segment is how to generate leads
> ATL campaigns can help them a lot, but the real added value for them is the outbound call center, if it forwards leads to agent network
> In campaigns and internal competitions they are usually the winners, they love selling, growing and being successful (and being rewarded)
36
> Some of those, who reach the ‘farmer’ size of portfolio would prefer continue ‘hunting’, but the number of clients require operational model change, therefore cooperate with less experienced but talented agent to support him/her in client relationship management (e.g. calling and contacting existing clients to discover changes in needs or life-cycle).
3. ‘Farmers’
> They have already built the client and policy portfolio that allows them to mainly focus on cross-selling and managing the existing clients
> Campaigns do not motivate them for extra productivity, but help them promoting new products
> Refreshment trainings needed for them on an annual basis to keep them informed about all actual developments and trends
> It’s worth utilizing their know-how in product development and also in trainings as best practices
> They do not need lead generation support, prefer contacting their clients on their own to maintain the relationship
> Motivation scheme shall be in-line with their priorities, not pressing them to find a lot of new clients, but to take care of the current client/policy portfolio.
The average productivity of agents - measured in annual premium equivalent - is the highest in the Czech Republic and Slovakia, possibly driven by pension business. On the overall regional level it has decreased by approximately 7% from 2011 to 2012. Only Slovakia and Romania grew in terms of APE while Poland and the Czech Republic witnessed a decrease of 36% and 11% respectively. We have to also make a note that APE/agent indicator is highly influenced by product mix.
CHANNEL OPERATIONS AND PERFORMANCE
Likewise, the policies per agents decreased overall in the region and only Slovakia showed some growth, as indicated in Figure 21. In terms of APE per policy, only Romania and Slovakia gained size, while Croatia managed to remain relatively stable.
Annual premium equivalent per tied agent slightly decreased over 2012 in the CE region overall
ANNUAL APE PER AGENT [EUR ‘000]
0 75 CHANGE [%] -11% -5% -36% -33% 34% CE -7% 15%
APE - Annual premium equivalent calculated from channel share of earned net premium (ENP) and adjusted for real prices 2011
2012
Figure 20. Agent productivity development
37 200 250 300 150 100 50 0 0 100 200 300 400 500
POLICIES PER AGENT [#] APE PER POLICY
[EUR]
CE
Source: Efma, Roland Berger
APE - Annual premium equivalent calculated from channel share of earned net premium (ENP) and adjusted for real prices 2012 2011
Figure 21. Tied agent channel productivity comparison
Source: Efma, Roland Berger Compared to current channel size.
Direct web insurance excluded as the channel has no physical network. Figure 22. Expected channel size changes
-50% Stable +50%
CHANNELS PREFERRED CHANGE
Tied agent network Branches Bancassurance
E-brokers/Aggregators
Social media Retail brokers
Inbound call center Outbound call center
Other (ATM, Retail, etc.) Corporate brokers
CHANNEL OPERATIONS AND PERFORMANCE